Loans that change the world

Posted on October 15, 2008. Filed under: Observations, Social Media | Tags: , , , , |

Kiva Loans that change the world

Kiva Loans that change the world

Have you heard of Kiva? As part of the bad08 posts against poverty I want to share the great story of this organization that is doing so much to combat poverty across the world, in a unique way.

You probably know all to well the quote “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime” but what if you empowered the person who knows how to fish so that they can buy a rod and reel, a net, or even a boat.  How much more will that person be able to do with the right resources?

Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world. As an entrepreneur & small business owner myself this approach really resonated with me.

I heard about it through a friend posting to Facebook.  I then posted questions to Twitter and Linked In to see if other people were using the site and what they thought of the system.  I got an overwhelmingly positive response.  People sent me stories of how long they had been involved, how much they had loaned and how much had been repaid.

I decided to check it out and found that I had a real opportunity to try and help. Let me explain how it works.  You go to the Kiva homepage, setup an account and then search for projects that you are interested in funding.  You transfer funds to your kiva account and then decide how much you want to attribute to each project.  Of course Micro-lending like any other type of lending attracts an element of risk.  But Kiva is very transparent about that risk – providing you with project repayment rates, and whether projects have missed payments or even not repayed at all.  Giving you the information you need to perform your due diligence.  This is my lender page on this you can see the four projects I picked to initially loan to.  What is more important you can also see how much has already been repaid. I chose the projects based on personal preferences, I wanted to loan to projects that involved either clothing or agriculture and were primarily run by women.  I also wanted to be involved in projects that were in both South America and Asia. 

This type of wealth creation is a different approach to “charity”, the money that you give goes directly to the project, there is no overhead deduction.  The money is returned to you as the borrower can afford to repay it, but there is no interest charged, so the debt is not compounded. As funds are returned to you, you can re-invest them in alternative projects and so what was one loan can in fact benefit many more projects.

This is not a charity for the rich, those with large amounts of disposable wealth (though of course they can join in as well), my initial investment was $100.  Not a lot of money in the grand scheme of things. So far about 17% of that has been returned and I will be re-investing that in other projects.

Recently AMEX ran a competition to have card holders vote for their favorite projects.  Kiva joined in this by emailing all of their lenders and asking them to vote and to promote the campaign to others.  Facebook pages were set up, messages went out across the Social Media networks and when the results were revealed yesterday Kiva was announced as third place winner, receiving $300,000.

I found Kiva because of a post on Facebook, I researched it through Twitter and LinkedIn and now I have the opportunity to write about it as part of Blog Action Day – blogging against Poverty.  Can Social Media make an impact on poverty.  As a group of enabled individuals we are arguably more connected than ever before.  Rather than dehumanizing us, technology is bringing us closer together, but if we only use that proximity for our own benefit then are we really using the technology to its fullest?

What will you do after bad08? Will it be just another news story, a few posts that you read, or will you change your life to help change others lives?

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